Recast Norms Delay Irbi Foreign Line Of Credit Plan

Also, the central government is believed to be considering a proposal to transform the IRBI into a company on the same lines as the Industrial Finance Corporation of India (IFCI) as some shares will be offered to private parties soon.

As IRBI authorities are unsure of the ultimate ownership of the institution, no final decisions are now being taken on any subject, until further intimation is made from the finance ministry.

Meanwhile, foreign lines of credit continue to be held up. Prior to the announcement of the Union Budget, the IRBI had come close to finalising an arrangement with a couple of Germany and Japan-based commercial banks which would lend it dollar credit.

 

It is believed that these negotiations have been slowed down due to the absence of any follow-up guidelines for implementing the finance minister's announcement that IRBI will become a full-fledged financial institution.

Moreover, plans to float unsecured bonds in the capital market to raise funds have also not been firmed up as a result of the impending restructure. However, there has been no follow-up on the announcement for reorganisation of this institution from the finance ministry, said sources.

The total reorganisation will be geared towards blotting out the impression that the IRBI is an institution essentially geared to nurse sick companies back into the black.

The institution had been intensely lobbying for a change in its role with the government and that it should be considered at an equal footing with the other financial institutions in the country such as the Industrial Development Bank of India, Industrial Credit and Investment Corporation of India and the IFCI.

The institution has, till date, funds worth Rs 388 crore locked upin sick units. The ailing public sector units for whom IRBI is the operating agency owe Rs 140 crore by way of principal and Rs 130 crore as interest. In 1995-96, the IRBI had lent to large private business groups such as Reliance Industries, Videocon, Williamson Magor, CESC and Star Paper.

Last fiscal, net profit rose to Rs 42.25 crore from Rs 5.6 crore the previous year. The institution had to make a provision of Rs 25.25 crore for its non-performing assets despite having made operating profits worth Rs 67.50 crore.

In 1995-96, it made sanctions worth Rs 897.26 crore, up from Rs 777.88 crore the previous year.="/incs/right.asp"-->